Supplies of critical minerals essential for key clean energy technologies such as electric vehicles and wind turbines need to pick up sharply over the coming decades to meet the world’s climate goals, creating potential energy security hazards that governments must act now to address, according to a new report by the International Energy Agency (IEA).

The special report, The Role of Critical Minerals in Clean Energy Transitions, is the most comprehensive global study to date on the central importance of minerals such as copper, lithium, nickel, cobalt and rare earth elements in a secure and rapid transformation of the global energy sector.

Part of the IEA’s flagship World Energy Outlook series, the report underscores that the mineral requirements of an energy system powered by clean energy technologies differ profoundly from one that runs on fossil fuels. A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a similarly sized gas-fired power plant.

Source: IEA

Demand outlooks and supply vulnerabilities vary widely by mineral, but the energy sector’s overall needs for critical minerals could increase by as much as six times by 2040, depending on how rapidly governments act to reduce emissions. Not only is this a massive increase in absolute terms, but as the costs of technologies fall, mineral inputs will account for an increasingly important part of the value of key components, making their overall costs more vulnerable to potential mineral price swings.

The commercial importance of these minerals also grow rapidly: today’s revenue from coal production is ten times larger than from energy transition minerals. However, in climate-driven scenarios, these positions are reversed well before 2040.

To produce the report, the IEA built on its detailed, technology-rich energy modeling tools to establish a unique database showing future mineral requirements under varying scenarios that span a range of levels of climate action and 11 different technology evolution pathways.

In climate-driven scenarios, mineral demand for use in batteries for electric vehicles and grid storage is a major force, growing at least thirty times to 2040. The rise of low-carbon power generation to meet climate goals also means a tripling of mineral demand from this sector by 2040. Wind takes the lead, bolstered by material-intensive offshore wind. Solar PV follows closely, due to the sheer volume of capacity that is added. The expansion of electricity networks also requires a huge amount of copper and aluminum.

Source: IEA

Unlike oil—a commodity produced around the world and traded in liquid markets—production and processing of many minerals such as lithium, cobalt and some rare earth elements are highly concentrated in a handful of countries, with the top three producers accounting for more than 75% of supplies.

Source: IEA

Complex and sometimes opaque supply chains also increase the risks that could arise from physical disruptions, trade restrictions or other developments in major producing countries. In addition, while there is no shortage of resources, the quality of available deposits is declining as the most immediately accessible resources are exploited. Producers also face the necessity of stricter environmental and social standards.

Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions. The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action. By acting now and acting together, they can significantly reduce the risks of price volatility and supply disruptions.

Left unaddressed, these potential vulnerabilities could make global progress towards a clean energy future slower and more costly—and therefore hamper international efforts to tackle climate change. This is what energy security looks like in the 21^st century, and the IEA is fully committed to helping governments ensure that these hazards don’t derail the global drive to accelerate energy transitions.

—Fatih Birol, Executive Director of the IEA

The IEA report provides six key recommendations for policy makers to foster stable supplies of critical minerals to support accelerated clean energy transitions.

1. Ensure adequate investment in diversified sources of new supply. Strong signals from policy makers about the speed of energy transitions and the growth trajectories of key clean energy technologies are critical to bring forward timely investment in new supply. Governments can play a major role in creating conditions conducive to diversified investment in the mineral supply chain.

2. Promote technology innovation at all points along the value chain. Stepping up R&D efforts for technology innovation on both the demand and production sides can enable more efficient use of materials, allow material substitution and unlock sizeable new supplies, thereby bringing substantial environmental and security benefits.

3. Scale up recycling. Policies can play a pivotal role in preparing for rapid growth of waste volumes by incentivising recycling for products reaching the end of their operating lives, supporting efficient collection and sorting activities and funding R&D into new recycling technologies.

4. Enhance supply chain resilience and market transparency. Policy makers need to explore a range of measures to improve the resilience of supply chains for different minerals, develop response capabilities to potential supply disruptions and enhance market transparency. Measures can include regular market assessments and stress tests, as well as voluntary strategic stockpiles in some instances.

5. Mainstream higher environmental, social and governance (ESG) standards. Efforts to incentivise higher environmental and social performance can increase sustainably and responsibly produced volumes and lower the cost of sourcing them. If industry players with strong environmental and social standards are rewarded in the marketplace, this can also bring new suppliers to a more diversified market.

6. Strengthen international collaboration between producers and consumers. An overarching international framework for dialogue and policy co-ordination among producers and consumers can play a vital role, an area where the IEA’s energy security framework could usefully be leveraged. Such an initiative could include actions to (i) provide reliable and transparent data; (ii) conduct regular assessments of potential vulnerabilities of supply chains and potential collective responses; (iii) promote knowledge transfer and capacity building to spread sustainable and responsible development practices; and (iv) strengthen environmental and social performance standards to ensure a level playing field.